ABSTRACT
This chapter makes the case for a centralized regulatory authority to realize the twin goals of telecommunications liberalization and promotion of integrated infrastructure. In Europe, the debate focuses on the interpretation of the subsidiarity principle and the appropriate regulatory roles for member states and the European Commission (EC); in the United States, the conflict is between state regulatory commissions and the Federal Communications Commission (FCC). We explain how the weakening of centralized authority in favor of state-level regulators (public utility commissions [PUCs] in the United States and national regulatory authorities [NRAs] in Europe) favors incumbent carriers (i.e., Bell operating companies [BOCs] in the United States and telecommunication organizations [TOs] in Europe) by creating multiple veto points and raising the costs of implementing procompetitive supply provisions. A case in point is the recent legislative setback for the FCC (i.e., 8th Circuit Decision, currently under appeal). We demonstrate the need for centralized regulation in the areas of interconnection pricing and licensing policies. Moreover, we explain how the growth ofthe Internet accentuates the arbitrariness of the state-interstate (national-international) distinction.
